Asian Stock Market: Displays caution as yields soar, oil eyes $78.00

Markets in the Asian domain have turned cautious as US Treasury yields are soaring like there is no tomorrow. The alpha offered on the 10-year US government bonds has refreshed its three-month high at 4.03%. The demand for US government bonds has dropped dramatically as investors are expecting the United States recession a reality as the Federal Reserve (Fed) looks set to push rates above 5% sooner. S&P500 futures have stretched their downside, portraying a negative market sentiment.

At the press time, Japan’s Nikkei225 remained flat, SZSE Component eased 0.26%, Hang Seng dropped 0.40%, and Nifty50 tumbled 0.56%.

Chinese equities have failed to capitalize on upbeat Caixin Manufacturing PMI data. The Chinese economy looks set on a path of economic recovery as the administration and the People’s Bank of China (PBoC) are pumping stimulus to spur the growth rate. Dismantling of the pandemic controls is allowing firms to operate at their full capacity.

Meanwhile, Bank of Japan (BoJ) policymakers are constantly chanting dovish stances on monetary policy guidance. After dovish commentaries from BoJ Governor Nominee Kazuo Ueda and BoJ Deputy Governor Ryozo Himino, the current monetary policy has also been considered as appropriate by board member Junko Nakagawa. He cited “An expansionary policy is highly essential for supporting the economy and fueling wages.”

On the oil front, oil prices are looking to extend their recovery to $78.00 in hopes of recovery in China post the release of the Caixin Manufacturing PMI, which overshadowed the risk of a global recession. Also, the less-than-anticipated build-up of oil inventories reported by the United States Energy Information Administration (EIA) has infused fresh blood into oil bulls. The US EIA reported a build-up of oil stockpiles by 1.165 million barrels for the week ending February 24.